Look, this isn't normally diary-worthy, but given the amount of confusion here, I'm simply going to link three crucial articles on why the scheme, apart from all it's other problems, just wouldn't have worked.
The crisis is very real. But the Paulson scheme, even the Congressional version of it, was just gasoline on the fire.
(1) The markets had already decided it wouldn't work. So much for the psychological aspect.
http://www.rgemonitor.com/...
(2) It was tried in Japan and didn't work.
http://www.rgemonitor.com/...
(3) It has no theoretical basis for working.
http://www.rgemonitor.com/...